The Push of Big City Prices and the Pull of Small Town Amenities

As house prices continue to rise in large, supply-constrained cities, what are the implications for other places that have room to grow? Recent literature suggests that amenities that improve quality of life are becoming increasingly important in location decisions. In this paper, we explore how location amenities have differentially driven population and price dynamics in small towns versus big cities, with a focus on the role of housing supply. We provide theory and evidence that demand for high-amenity locations has increased in recent decades. High-amenity counties in large metropolitan areas have experienced relatively higher price increases, while high-amenity counties in small metros and rural areas have absorbed increased demand through population growth. This divergence in population dynamics between big cities and small towns was driven by domestic migration, with high-amenity small towns and rural areas experiencing significant domestic in-migration.